TORONTO — BMO Financial Group's second-quarter profit rose from a year ago even as its Canadian banking and capital markets divisions saw income drop from tariff-related uncertainty.
The bank on Wednesday reported a net income of $1.96 billion, up from $1.87 billion for the same quarter last year, with the biggest boost coming from lower losses in its corporate segment after a spike in acquisition costs last year.
It also announced a quarterly dividend of $1.63 per common share, an increase of eight cents compared with the prior year, or a four-cent hike compared with the previous quarter.
But overall the bank's earnings reflect hesitant consumers and businesses given the unpredictable trade policies of U.S. President Donald Trump.
"The economic backdrop in North America continues to be challenged by the uncertain environment," said chief executive Darryl White on an earnings call.
"Business activity and loan demand in both countries is reflecting the impact from trade uncertainty, and businesses are being cautious around the deployment of capital."
The uncertainty has led to a rise from last year in the amount of money BMO has set aside for potentially bad loans, with provisions of $1.05 billion in the quarter, up from $705 million in the same quarter last year.
The move follows other banks that also increased provisions in the quarter. Scotiabank said Tuesday it had boosted its total to $1.4 billion, up from slightly over $1 billion last year, while on Wednesday National Bank said its provisions were at $545 million, up from $138 million last year.
BMO's provisions are however down from two quarters ago, including in the impaired provisions category (where it isn't confident it will be repaid) which were at $765 million, down from $1.11 billion two quarters ago.
The drop from the recent peak came as businesses are showing signs of optimism that the trade issues could be resolved, said Nadim Hirji, BMO's head of commercial banking.
"Execution has obviously been delayed due to uncertainty in the market. However, I will say also that in my recent conversations with clients, sentiment is actually improving," he said.
"We do expect loan growth to be positive in the back half of the year. And I'll also say that we've seen the month of April shows some positive signs already."
National Bank chief executive Laurent Ferreira also said he was encouraged by the direction on trade, and that the effective tariff rate for Canadian businesses is lower than anticipated.
"Despite the uncertainty, Canadian consumers and businesses are demonstrating resilience," he said on an earnings call Wednesday.
Canadian Parliament resuming work after the election should also help boost confidence, said White.
"The recent outcome of the federal election is a renewed government with an aggressive economic growth agenda," he said.
"We've seen promising early results by the federal and several provincial governments in support of eliminating barriers to interprovincial trade. We encourage a positive resolution in support of a stronger overall Canadian economy."
The bank says profit amounted to $2.50 per diluted share for the quarter ended April 30, up from $2.36 per diluted share a year earlier.
Revenue totalled $8.68 billion, up from $7.97 billion in the same quarter last year.
On an adjusted basis, BMO says it earned $2.62 per share in its latest quarter, up from an adjusted profit of $2.59 per share a year earlier.
Analysts on average had expected BMO to earn an adjusted profit of $2.53 per share, according to LSEG Data & Analytics.
The beat came in part from outsized trading revenue that will likely moderate in the quarters ahead, said Scotiabank analyst Mike Rizvanovic in a note, while he said loan growth was an issue.
"Another sequential decline in loan balances in the U.S. [personal and commercial] banking segment remains a concern in terms of the bank’s growth trajectory in that key market."
Investors will get more insights into bank earnings Thursday as RBC and CIBC report results to wrap the quarter for Canada's big banks.
This report by The Canadian Press was first published May 28, 2025.
Companies in this story: (TSX:BMO)
Ian Bickis, The Canadian Press
